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Verizon drops DSL surcharge

Customer gripes lead to decision not to charge DSL subscribers a "supplier surcharge."

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
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Marguerite Reardon
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After hearing complaints from customers, Verizon Communications has dropped plans to impose a supplier surcharge on its DSL service, the company said Wednesday.

Verizon began notifying customers earlier this month that it planned to tack on a surcharge starting Aug. 26 to cover costs associated with providing DSL (digital subscriber line) service to customers who do not also subscribe to the company's traditional phone service.

The surcharge was being added at the same time the company was no longer obligated by the Federal Communications Commission to pay into the Universal Service Fund, a federal program that helps subsidize rural telephone service and provide Internet access to schools and libraries. This fee was expected to be eliminated from phone bills.

Verizon's withdrawal of the surcharge is effective immediately. DSL subscribers who have already been billed for the surcharge will receive a credit, Verizon said.

"We have listened to our customers and are eliminating this charge in response to their concerns," Bob Ingalls, chief marketing officer of Verizon Telecom, said in a statement.

Last year, the Federal Communications Commission changed how it classifies DSL services, thus eliminating a fee that had been charged to all DSL subscribers to help pay into the Universal Service Fund.

Verizon DSL customers subscribing to the company's 768Kbps (kilobits per second) service paid about $1.25 into USF every month. Customers of its 3Mbps (megabits per second) service paid about $2.83 per month, the company said. Instead of simply dropping the fee, Verizon planned to add a new "supplier surcharge" of about $1.20 per month for the slower service and $2.70 for the faster service.

The FCC had planned to send a letter of inquiry to Verizon and BellSouth, which also proposed tacking on a new fee in lieu of the USF charge, according to Reuters News Service. BellSouth, which continued to call its surcharge a "regulatory cost recovery fee" despite the fact that the DSL service is no longer regulated, dropped its plans for a surcharge on Friday.

"I am pleased that both Verizon and BellSouth have eliminated fees recently imposed on their DSL customers," FCC Chairman Kevin Martin said in a statement. "Consumers should receive the benefits of the commission's action last summer to remove regulations imposed on DSL service. The continued deployment of broadband at affordable prices for consumers remains my top priority as chairman."